Food & Beverage ERP vs PLM: Which One Do You Need?
Today’s food and beverage companies face market challenges that make keeping up with evolving consumer tastes, broader market trends and optimizing the cost of goods (COGS) difficult. From razor-thin product margins with growing pressure from discount retailers and brands to larger product portfolios, rapid changes in a highly regulated market, managing compliance and traceability in a complex supply chain and meeting consumer demands, there is a lot to handle. Having the right technologies in place to make sound product decisions is critical.
Two key technologies, Enterprise Resource Planning (ERP) and Product Lifecycle Management (PLM), are foundational systems for creating and retailing innovative and profitable food and beverage products. Deciding which system to implement can have a dramatic impact on your ability to boost new product introduction success, optimize portfolios, manage production complexity and increase speed to market to ultimately get closer to the end consumer.
ERP: Logistical and transactional
ERP systems are oriented around business operations, covering customer service, finance, accounting, distribution, labor, shipping and logistics and other aspects of day-to-day execution. At the process level, an ERP solution might support sales and purchase order management, fulfillment, human resource allocation and provide a single source of cost, price, margin and other commercial information.
In essence, ERP picks up from PLM and takes a finalized product forward. This means that innovation, R&D, product development, assortment planning and portfolio management, sourcing, recipe development, nutrients, allergens, label claims and packaging, quality control and compliance have already been signed off by the time products reach ERP, which focuses on operational execution. ERP itself cannot house those creative and collaborative processes as ERP is designed with a specific focus: cost, ship, sell, monitor and repeat.
PLM: Consistent and collaborative
Teams working at food brands, manufacturers, producers and retailers often use a variety of different and specialized digital solutions to manage each part of the product lifecycle as a product moves from concept to consumer. However, using separate systems that are siloed, disconnected and incompatible causes major issues with data consistency, manual data entry and effective collaboration between internal teams and external suppliers. This creates significant roadblocks that are becoming much more apparent in the post-Covid remote working world.
PLM software is an end-to-end product development solution that provides a real-time ‘single source of the truth’ for product-related data and manages products, people and processes across all stages of the product lifecycle. Everything connected to a product, from recipes to region-specific packaging to retail sales data, is accessible and visible in PLM for everyone who needs it and can be updated in real time by internal and external teams.
The new generation of modern and mobile PLM solutions can be easily integrated with other platforms such as your ERP solution, Product Information Management (PIM), Digital Asset Management (DAM), e-commerce, Customer Relationship Management (CRM), Product Portfolio Management (PPM), Sales & Operations Planning (S&OP), Laboratory Information Management Systems (LIMS), Labeling & Artwork (LAM) and more and can be used by teams on the move or working from home. This enhanced visibility, consistency and collaboration speeds time to market, increases product introduction success rates, improves quality and compliance, heightens visibility and traceability and makes it easier to manage costs.
Without modern food and beverage PLM, the potential of ERP is limited. In order to deliver enterprise-wide results, ERP requires an input data accuracy of greater than 99%. Using PLM as a digital foundation for product data ensures data quality and accuracy that improve the benefits of ERP. While ERP can be essential for the transactional stages of the product journey, PLM is where the heart of a food and beverage business resides.
The promise of PLM
For food and beverage producers, retailers and brands looking for better ways to work, PLM helps to:
- Guide and manage product development with workflows & dashboards
- Speed up new product introductions and formulation development
- Effectively plan assortments and manage complex product portfolios
- Streamline sourcing requests and collaborate with suppliers
- Automatically create detailed packaging and artwork briefs
- Reduce quality and compliance risks with greater visibility and control
- Trace and track everything product-related
The promise of PLM is simple: it replaces many disconnected systems with a hub to centralize and streamline product data and workflows so that people can work together efficiently while everything flows to and from the product. With PLM as a digital foundation, food and beverage companies can align everyday processes with business goals and confidently handle operational challenges.
So, ERP or PLM? Perhaps a better question is: which should come first? PLM supports the sale of products by supporting processes that define the brand, engage the consumer and differentiate the company’s products in the marketplace. As products are born in PLM, then carry over to ERP, clean data from PLM onwards is critical to the health and efficiency of the ERP and optimized financial and inventory planning. PLM’s domain has a greater impact on product margins and profitability than that of ERP and PLM sets the foundation for ERP. Without the unified collaborative processes and ‘single version of truth’ PLM provides, even the best ERP system will fail to live up to its potential.
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